If you’re a student at the University of California (UC), Riverside, your budget might be tight. Between visiting the bars in Canyon Crest and making the occasional trip to the bookstore, you might not have much money left over to cover the cost of laundry, much less to buy a car.
But saving for a new (or used) ride is possible — even for impoverished students. It will require discipline and some tough choices, but with the right strategy, you can save enough to get around Riverside in style.
Steps to Buying a Car in Riverside
1. Set a budget, and stick to it.
Saving for a big-ticket item like a car has to start with a budget. There are a ton of different strategies for budgeting, but the basics never change. Your budget should take inventory of three financial categories: money coming in, money spent and money saved. Whether you use free, cloud-based software like Mint or a paper and pen, identify your spending habits and make the adjustments necessary for your plan. If you stick with your budget, lofty goals such as saving for a car can be possible.
2. Start a fund, and treat it like a bill.
Rent, gas, utilities — people have a way of finding money for the bills that absolutely have to get paid. After you create your budget, decide on a reasonable monthly amount to save for your car fund, and treat it as you would a vital bill. Don’t go to the movies, buy coffee or order Chinese food until your car fund bill is paid.
3. Invest your money, or put it in a high-yield savings account.
You can expedite your savings goals by putting your car fund in an account that earns interest, such as a CD or a high-yield savings account. Look for an account that offers a high annual percentage yield (APY). The higher the APY, the more interest your savings will earn.
4. Join a credit union instead of borrowing from a big bank.
According to the National Credit Union Administration (NCUA), which is the government agency responsible for regulating, chartering and supervising these financial institutions, credit unions perform the same services as banks. But since they are not-for-profit and member-owned, credit unions often tend to offer more favorable auto loan interest rates and are often more willing to work with members on an individual, case-by-case basis.
5. Build your credit while you save.
Your credit history and score directly determine the interest rate you will pay on your car loan, and those with high scores tend to get the best deals. Meanwhile, people with low credit scores often have a hard time borrowing money and aren’t offered a low interest rate on their car loans. As you’re saving money for a new car, practice good credit-building habits such as making your monthly credit card payments on time and paying your card in full each month.
Saving for a down payment on a car is possible, even if you consider yourself a broke UC Riverside student. Create a budget, stick to it religiously, treat your car fund as if it were a bill, and park your money in an account where it will actually grow. And don’t forget to build or establish your credit. Sooner than you think, you’ll have enough money to buy a car.